As I have subtly indicated in the title, I think I have done well in my investment journey so far. After crunching the numbers, the result is actually much better than what I had initially assumed. Based on my “active portfolio”, I have achieved a CAGR of close to 19% from November 2010 to Dec 2013.
But hey, I also understand that “well” is pretty subjective. So before some investment gurus with >30% annual returns over several decades come bearing down on me (mocking at both the returns and the short time period of my records), let me clarify that I am just comparing with my “other portfolio”, my Philip Capital Sharebuilder plan.
That passive and automatic portfolio ($500 channelled towards STI ETF and $100 towards DBS) yielded a CAGR of less than 4% over the same period. That’s a 15% difference! Moreover, this is likely a fair comparison as it was lucky that I started acting on both Warren Buffett’s & John Bogle’s investment philosophies at the same time in Nov 2010. (A comparison like that would also eliminate most of the limitations of the XIRR function)
But even though the numbers do look pretty good the journey wasn’t exactly smooth sailing. I could still recall Mrs 15HWW’s constant nagging that I should have bought earlier/waited for a while more when the price became lower before buying those shares when the portfolio was in a sea of red. =p (like duh) The highlights of the four years are detailed below:
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2010 (do refer to here for a more detailed breakdown)
CAGR: -22.2%
I didn’t start off on a wonderful note as you can see from the CAGR. But it’s probably not really representative since it was only for 2 months and the absolute loss was only a few hundred dollars at the end of the year. I had invested in companies like Boustead, MTQ and Kingsmen during this short period
2011 (do refer to here for a more detailed breakdown)
CAGR: -1.4%
With the Arab Spring, stocks like Boustead and MTQ got battered badly. But it presented an opportunity as I bought more stocks of Boustead. This was also the year when I started receiving dividends and I accumulated $2,200. Bought into Challenger, Vicom & SIA Engg during 2011 too.
2012 (do refer to here for a more detailed breakdown)
CAGR: 26.3%
2012 was the year when the portfolio started turning green instead of languishing in the red. However, I also made “mistakes” as I sold off Saizen Reit and Silverlake and used the proceeds to buy into Wilmar. I am pretty sure if I had not done that, my overall CAGR would have gone up by at least another couple of % points. Nothing much on the buying front as we were saving up for our wedding and renovation.
2013 (do refer to here for a more detailed breakdown)
CAGR: 28.3%
Best year thus far as some stocks like Boustead & Challenger went into overdrive and boosted overall returns. Injected $43,000 into this portfolio as I adopted a new goal of early semi-retirement and also started this blog. The primary purpose of most of the purchases (notably the Reits) were to increase the overall yield and passive income of the portfolio.
Summary Table
| Year | Initial | Injection | Sale | Dividend | Final | Returns |
| 2010 | $0 | $26,489 | $0 | $0 | $25,860 | -22.20% |
| 2011 | $25,860 | $32,487 | $0 | $2,209 | $55,555 | -1.40% |
| 2012 | $55,555 | $14,561 | $8,097 | $2,807 | $73,770 | 26.40% |
| 2013 | $73,770 | $43,519 | $0 | $3,717 | $138,550 | 28.30% |
| Total | $117,056 | $8,097 | $8,733 |
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After accounting for the divestments and dividends, the gains total about $38,000 from a capital of $117,000. Ignoring the time value of purchases, that’s about 33% in total returns. It’s also reassuring to know that even if the “market” drops by >25% now, this stocks portfolio would still be in the black. =p
Regarding the high CAGR so far, I fully understand that my investment journey has been short so far and I do not expect the exceptional returns to continue indefinitely. More likely than not (especially with my recent purchases that are more yield-oriented), the returns are likely to revert to the mean in the next few years.
Nonetheless, I am still hoping Lady Luck continues to shine on me. =p
Since it took me some time to dig out the full details of the purchases, sales and dividends of my active portfolio, I have decided to create a page to document them if I ever need them for reference again.
You will need at least one market cycle to know your process is working well or not.
Bull-Bear-Bull
or Bear-Bull-Bear
Hi CW8888,
Agree! It’s more like an academic exercise right now to find out how I’ve been doing thus far.
Hi 15HWW,
Nice returns, no doubt about that.
You’ll have some good years, you’ll have some bad years.
Personally, my own opinion is to keep costs low. Reason being, yes, 30+k worth of profits is really nice. But in the long run, it’s not much.
As your portfolio grows bigger, eventually, 30k doesn’t impact your total portfolio by much. It’s still a lot of money, yes, but I reckon it won’t change your lifestyle by much. I’m thinking you’ll work some part time after you’re retired so probably you won’t be eating your investments anyway. You’ll probably still earn enough to maintain a frugal lifestyle and still afford to save anyway. So you’d probably be contributing to your portfolio even after retirement and the portfolio is more of just a backing for a sense of security. Granted, it’s still nice to see the portfolio do well and you make a good % of return. I also get a kick out of that. But I remind myself that the investment is really a backing so that I have options.
Hi ERSG,
Indeed. As what Jacob has described so often at ERE, lowering expenses is a much more powerful lever if the goal is to retire/semi-retire early. A high return is just extra gloss.
And don’t worry. I am definitely not planning for a 10% withdrawal rate in the future since I am not expecting the good returns to continue indefinitely, especially when the portfolio gets larger.
Good job!
Just a few points:-
1) Are you computing your CAGR per year using XIRR function in Excel? If so for Year 2010 how did you get such a large negative number? Injection was about $26k and final is also about $26k so it should be a flat performance for the year, right? I didn’t really check for the rest of the years.
2) How was the CAGR of +19%/year for the 3-year period computed? Was it using the same method?
3) I think a more realistic CAGR would also include a down market period. Not to say your current performance is not good, but usually if we want to test if a particular process or strategy works, we would measure the return over a full cycle.
Great returns thus far, keep it up!
Regards.
Hi Musicwhiz,
Glad for your comments as this is the first time I am calculating the CAGR using the excel function. Would be good if someone can ascertain that what I am doing is correct.
1) 2010 is somewhat an anomaly since it was a short period of 2 months. Think the small losses (2%-3%) were extrapolated/annualized to create such a negative number. It does seem fairer if I accounted for these 2 months in 2011 (14 months of transactions), as the CAGR would be -2.7%, which appears much more reasonable.
2) Yah, it’s the same method. Actually, I did this first and later dissected the data to calculate the yearly returns.
3) I don’t think I have a clear strategy, except to buy at a low/reasonable price and accumulate more and more of businesses that I feel are sound for the medium/long term. Guess with good returns over the past few years, there’s also a good chance the numbers could plunge just as fast in a bear market.
Thanks for your encouragement!
Hi 15HWW,
It’s not only the CAGR that you should be proud of. The fact that you can save up and invest $30K annually is also an achievement! Keep it up!
Rgds,
(The) Boring Investor
Hi Chin Wai,
Thanks for your encouragement. It definitely wasn’t easy putting the money in during those days when I haven’t even started working. =)
Hi hww
I hv the same question with musicwhiz. Based on your file, it seems that you computed via xirr since there are add ins during the year.
You had a superb year during 2013. I think most of my other years would hv match yours but I only got like 6% returns for 2013 including dividends. Still outperforming sti jn general I suspect but great job on you.
Impressive returns over the last 3 years.
I would like to take up this chance to link up with you.
As a gesture of good faith, I will add you to my blogroll first. Hope to see
my blog in your site as well. Thanks in advance!!
Dave (www.SmartPassiveCashFlow.com)